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ECI Wage Dispersion Narrows In Sign Of Continued Normalisation

US DATA
  • One additional finding of note within the earlier ECI report, which broadly saw wage pressures moderate a little faster than expected, was that the dispersion continued to narrow across industries in a sign of continued normalisation.
  • Specifically, the standard deviation of quarterly non-annualized growth rates when looking across private industries on a wages & salaries basis fell further from 0.43 to 0.30, the lowest since 1Q19.
  • Private wage growth of 1% Q/Q is still too high as it would require strong productivity growth to be consistent with the 2% inflation target (for perspective productivity growth was -1.3% Y/Y as of Q3), but is at least seen on a better trend for the FOMC after 1.6% in Q2 and 1.2% in Q3.

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